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Johannesburg - Share prices on the JSE climbed again on Thursday morning, in line with emerging markets elsewhere in the world on evidence that US interest rates will probably stay low for longer than expected.
The JSE, which is closing in on an all-time high, jumped sharply in early trade but then moved sideways for the rest of the morning. The market was however still modestly higher by mid-morning.
The rand put a cap on JSE gains as it also strengthened dramatically overnight on news that the Federal Reserve would keep on a slow path of monetary tightening. The currency, which was still trading at R13.07 on Wednesday, at mid-morning stood at R12.91 to the dollar.
That is bad news for the dual-listed shares on the JSE, which earn most their income in foreign currencies which are worth less if the rand is strong.
Analysts said the Fed’s statement on Wednesday after the decision to keep interest rates intact was cautious on the inflation outlook, which bolstered views it might not hike interest rates again this year.
Equity markets responded immediately and Wall Street closed on a record high on Wednesday. Asian stocks jumped on Thursday to their highest in almost a decade, and the MSCI's 47-country All World share index reached a new record high.
By mid-morning the All-share index on the JSE was 0.36% higher on a new 52-week high of 55 035 points, less than a hundred points below the all-time high of 55 188 points set in April 2015. The Top 40 index, which gained 0.44% to 48 779 points in morning trade, was also on a 52-week high and not far from its all-time high of 49 226 points.
The Industrial index was only 0.06% higher due to the strong rand but the Resources index was a solid 1.42% stronger, supported by a globall rally in commodity prices. The Financial index was 0.36% up.
The JSE was pulled higher by Naspers [JSE:NPN], which benefited from the rally in emerging markets as its subsidiary Tencent, which is listed in Hong Kong, gained 2.67% to a new high of $HK308.40. Naspers owns 34% of the Chinese internet giant, which represents by far the biggest part of its value and income. Stocks lifted 1.58% to yet another all-time high of R2 913.27.
Richemont [JSE:CFR] lost 0.29% to R108.21 and Sasol [JSE:Sol] was 0.78% higher at R390.02, after the Brent crude price jumped 1.10% to $50.75.
MTN [JSE:MTN] was the big loser as it shed 8.51% of its value to trade at R116.40, which meant it gave up all the gains of the last few days. MTN was one of the busiest shares on the JSE, with 6.7 million shares being sold for R814m.
Investors were clearly not impressed with MTN's trading statement, in which the company said it would swing back to profit in the first half of its financial year after suffering a loss in the previous year due to a $1.1bn fine paid to the Nigerian authorities.
MTN expects headline earnings per share to be between 210 cents and 230 cents for the six months to end-June 2017 compared to a headline loss per share of 271 cents in the prior comparable period, but investors expected more.
Standard Bank’s [JSE:SBK] share price was 1.50% higher at R163.10, equalling its 52-week high. The stock has made steady progress over the past few weeks, gaining more than 11% over the past 30 days.
The international commodity giants continued with their rally of the past few days on higher commodity prices. Anglo American [JSE:AGL] traded 3.94% higher at R210.23 after it gained 17.8% over the previous 30 days. BHP [JSE:BIL], which is 20.2% higher over the previous 30 days, strengthened 0.81% to R231.66.
- Fin24's parent company Media24 is part of the Naspers Group.
